"Don't get your stock tips from blogs" or "Never listen to Baraqyal"

Back in March, I made a post about how Ford was undervalued thanks to GM. Boy, was I ever wrong. At the time, it was $7.88 a share. Today it closed at $6.56. If you had bought shares based on my random thoughts, your 4 month return would be -16.75%.

My 3 reasons I thought it was a good buy at the time and what has happened since then.

1) Positive net income in the past: The results from the Q1 of 06: -$0.64 EPS.

2) Projected future positive net income: Earnings estimates for Q2 06: $0.15 EPS, however Q3 is a loss of $0.12 a share, and the overall estimate for FY 06 has dropped from $0.59 to $0.48.

3) High dividend payout: Today Ford cut it's dividend in half from $0.40 a share (~5% @ $7.88) to $0.20 a share (~3% @ 6.56). If you subscribe to any sort of dividend discount model, about the last thing you want to see is a dividend get cut in half.

In the meantime, General Motors SHOT UP from $19.71 on March 1 to close today at $28.32. Although I still think General Motors is on it's way to bankruptcy, if you had bought when I first said that and sold today, your 4 month return would be 43.70%!

The lesson here is that I don't really understand the stock market or the auto business. Before I make any more grand sweeping predictions about value, I'm going to sit down and read 3 years of annual reports for every company involved. I still probably won't understand the market or direction the wind is blowing, but at least I will have properly done more research which hopefully will reduce my irrational negativity.